Compromise Agreements: Understand what they Involve
Despite the wounds of recession finally beginning to heal, memories of redundancy and job losses are still fresh in people's minds. With the rate of unemployment standing at 7.8 per cent, redundancies have taken a hit on both employees' lives and the state of the UK's economy. If you've been made redundant, or are expecting to be made redundant in the near future, it's important to know your rights - and this means familiarising yourself with compromise agreements.
These legal documents are useful should the relationship between an employer and their employee become strained. If this results in a termination of employment, it is in the interests of both parties to turn to a compromise agreement. This will guarantee the employee receives an adequate severance package, while the employer can rest assured that they won't be pursued for any claims that could otherwise lead to an employment tribunal.
Termination packages such as these are practical because not only can they be used to settle a workplace dispute, they prevent any further legal action from being sanctioned - something that's in the interest of both parties, particularly if their compromise agreement allows them to reach a mutually beneficial outcome.
It's possible for an employee to pick holes in the exit proposals offered to them, but if they understand what a compromise agreement involves, they are more likely to be satisfied with the outcome. So, how does the process work? Well, once employment has been terminated, both parties must sign the agreement in the presence of a solicitor, who will guarantee that proceedings are in order and legally binding. The solicitor's role isn't just to oversee the compromise agreement - they're also on hand to offer advice and assistance during the negotiation process.
It is the solicitor's job to ensure that the employee fully understands everything that the compromise agreement involves, and they must sign their name to this effect and agree that the appropriate advice has been provided.
A compromise agreement will normally contain the following elements:
· Compensation details, which normally involves a tax-free payment to the employee.
· A reference from the employer that can help the employee secure a position elsewhere.
· The details of assurances promised by the employer.
· That the employee agrees to the compromise agreement's terms and an assurance that any future legal action will not be pursued.
· The employee's assurances, such as confidentiality. This normally forms a clause in the agreement and is agreed by both parties.
The solicitor is there to help the employee through the process. If they find themselves unsatisfied with any of its contents and clauses, the solicitor is free to negotiate a more satisfactory deal for their client.
Employees proceeding in negotiations should be wary of talks between themselves and their employer breaking down. While this is possible, usually due to the strained nature of the relationship, the employee risks not receiving the compensation package they believe they are due - something that can only be resolved at an employment tribunal. While your solicitor is there to advise you should this be the ultimate course of action, it is generally recommended to pursue a compromise agreement. More often than not, an employee facing redundancy will receive a fair and adequate termination package.
Naturally, it's best to avoid a dispute with your employee. If redundancy is on the cards, you do have certain rights and are entitled to help. Employers should always consult with an employee before confirming their redundancy, a process that will allow the employee to have some influence in the redundancy. This will normally involve a direct conversation, while any alternatives to redundancy will also be explored. Should neither of these happen, you may have a case for unfair dismissal.
Employees should also be aware of redeployment, which involves the employee finding the person who is being made redundant alternative employment within the same organisation or an affiliate company.
You may also be entitled to redundancy pay, and how much you receive is based on three factors: how long you have been continuously employed for, how old you are and the amount you are paid each week. It's worth an employee checking their employment contract to see what it has to say about redundancy packages - occasionally, they will be entitled to something more generous.
While redundancy is hard for any employee to accept, the process needn't be a messy one. If a dispute does arise, however, then a solicitor can help you through the compromise agreement process and ensure that you don't miss out on what you're entitled to.
